The rent is late, your job is in jeopardy, and now you have to worry about your taxes too! Tax time can be extrememly stressful, and can cause high levels of anxiety in adults. To ease a little of the tension, it helps to keep your paperwork organized. But what if you don’t know how? What if you don’t know what KIND of paperwork is needed? Let me try to help.
You’ll need to arrange several piles of paperwork for different categories. The average person will incur these types of deductions throughout the course of a year. Make a pile for each of these:
– Doctor bills, prescription medicine receipts, hospital bills, health insurance premiums
– Donations and contributions
– Property tax payments (cars, boats, etc)
– W-2’s or 1099’s (these are forms you’ll receive from your employer indicating your wages)
– Mortgage interest information (your mortgage company will send you this)
– Student loan paperwork
– If you made any tax payments to the government through the year
– Tax preparation fees you paid the previous year
– Your tax return for the year before (federal & state)
– If you own your own business, or are self employed, you may also have deductions such as gas expense, lodging, dining, office rent, utilities, and other related expenses.
After you have your paperwork in it’s proper pile, keep it seperated. It’s a very good idea to invest in an accordian file binder. This is a simple, and inexpensive, method of keeping your tax paperwork in order. You can find these types of binders at any office supply store for under $ 20.00. The binder stretches out, opens at the top, and has many different sections to keep your paperwork in order. Label each section and keep the related paperwork there. Now, if you need to know, for example, how much childcare you paid out, you can flip right to that section and pull out the paperwork. No more searching through hundreds of pieces of paper.
Now that you know what to do, you can keep your paperwork organized easily and effectively. I’d advise getting a new binder at the start of each new tax year. Label the front of the binder with the year to prevent confusion. Don’t wait till tax time to do it, keep it all in your accordian binder as you go, and make life easier on yourself. When NEXT tax season comes along, you’ll be prepared, and have prevented yourself the stress of scrambling to get your paperwork and receipts in order.